MB Garden Buildings Ltd v Mark Burton Construction Ltd & Anor

On 13 August 2012 the claim form was issued in these proceedings. Now over 18 months later there has been no significant progress in the action.

The claimant (“MBGB”) says that this is because the second defendant persists in wrongly denying that the claim form and particulars of claim have been properly served, or has evaded service. MBGB invites the court to cut through this prevarication by making an order to ensure that the parties get on with the litigation.

The position of the second defendant (“Mr Burton”) is that the delays and difficulties encountered by the claimant have all been of the claimant’s making; the claim form and particulars of claim have not been served according to the rules and there is an end of it.

The action is for infringement of a registered trade mark and passing off. MBGB owns a UK registered trade mark MB GARDEN BUILDINGS for ‘garden buildings made of wood’ and ‘construction of garden sheds and buildings’. It also claims goodwill in its business in garden buildings identified by that mark.

The action against the first defendant has been stayed because it went into receivership. That leaves Mr Burton. The complaint against him centres on his having registered the domain name mbgardenbuildings.com on 29 January 2011. He says he never used the domain name. He also says that his registration was due for renewal on 29 January 2013, that he did not renew it, so the registration has expired. It is common ground that not long after the expiry of Mr Burton’s registration, on 20 April 2013 mbgardenbuildings.com was registered instead in the name of Mark Boyles, who is a director of the claimant.

It was not suggested that there is any continuing threat of infringement by Mr Burton, so for nearly a year these proceedings have been concerned only with whether Mr Burton is liable for past infringements.

Following issue of the claim form on 13 August 2012, the lengthy procedural history begins with the delivery (I use a neutral term) on 23 August 2012 of the claim form and particulars of claim to an address identified by both parties as “12 Mayfield Road”. I was not told in which town this is; the evidence implies that it is in Walton on Thames, but it doesn’t matter.

On 19 September 2012 the claim form and particulars of claim were returned marked ‘return to sender’.

On 8 November 2012 the claimants instructed a private investigator. He spoke to the neighbours at Mayfield Road who told him that Mr Burton had moved to 23 Irvine Place, Virginia Water, Surrey.

On 12 November 2012 the claim form and particulars of claim were posted to that address. If there was good service at Irvine Place it would be deemed to have happened on 14 November 2012.

No response from Mr Burton was forthcoming.

On 13 December 2012 the four month period for completing a step for service of the claim form required by CPR rule 7.5(1) expired.

On 14 January 2013 MBGB applied for judgment in default of acknowledgment of service.

By an order dated 21 February 2013 HH Judge Birss QC granted judgment against Mr Burton. The order does not expressly state that it was made pursuant to a judgment in default, but that is what it seems to have been.

On 16 April 2013 Mr Burton applied to set aside the judgment of 21 February 2013. He said in a witness statement of that date that he had not received the claim form and particulars of claim. On his account, on 10 November 2012, two days before they were posted to 23 Irvine Place, he had moved out of that address because of marital difficulties. He said he had returned on 2 March 2013 following reconciliation. He must have become aware that there were proceedings against him before his return at the beginning of March because he also states that he wrote to the court on 25 February 2013 and received a response on 2 March 2013. I have not seen that correspondence.

By an order dated 28 May 2013 Birss J set aside his earlier order of 21 February 2013.

On 14 June 2013 MBGB responded by applying to set aside the order of 28 May 2013. MBGB said that they had been given no notice of Mr Burton’s application which resulted in this order and wished to contest the grounds for making it. In support of the application there was a witness statement from Mark Boyles, director of MBGB. Mr Boyles said that following the delivery of the claim form and particulars of claim to 23 Irvine Place, Virginia Water, he had a phone call from a woman claiming to be Mr Burton’s ex wife. She said that she had steamed open Mr Burton’s post to find the letter from MBGB’s solicitors. In a witness statement Owen Ross of MBGB’s solicitors stated that the day after Mrs Burton called Mr Boyles, on 16 November 2013 she called Mr Ross confirming that she had steamed open the letter from Mr Ross’s firm and added that she had also received the letter from MBGB’s solicitors at her old address, which I take to be Mayfield Road.

The application to set aside the order of 28 May 2013 came before District Judge Lambert sitting as a judge of the Patents County Court (“PCC”). By an order dated 25 June 2013 she dismissed the application. In the reasons given in the order she found that MBGB’s solicitors had received notice of the application of 16 April 2013, the present application to set aside had not been made within due time, the further evidence from MBGB did not establish that Mr Burton had been served with the particulars of claim and that he had a real prospect of defending the action.

On 23 August 2013 District Judge Lambert made another order, this time on her own initiative. She ordered that MBGB serve the claim form and particulars of claim on Mr Burton by 30 August 2013. I am sure that District Judge Lambert made this order for the commendable reason that it is the policy of the PCC (now the IPEC) that wherever possible proceedings should not be allowed to drift.

In accordance with the order, on 29 August 2013 the claim form and particulars of claim were delivered to Mr Burton at 23 Irvine Place. The response pack was incomplete.

On 29 August 2013 Mr Burton’s attorneys wrote to the PCC complaining that the order of 23 August 2013 had purported to extend the time for service of the particulars of claim without supporting evidence.

In an order dated 9 September 2013 District Judge Lambert set aside her order of 23 August 2013. Her stated reasons were that after Birss J’s order of 28 May 2013 it had been open to MBGB to apply to extend the time for service of the claim form under CPR 7.6, or alternatively to seek an order retrospectively to authorise service of the claim form and particulars of claim under CPR rules 6.15 and 6.27. She ordered that if MBGB wished to apply under those rules it should do so by 16 September 2013.

MBGB did so apply by an application notice dated 12 September 2013. This is the hearing of that application.

MBGB’s first submission is that District Judge Lambert’s order of 23 August 2013 by implication retrospectively extended the time for service of the claim form pursuant to CPR rule 7.6(3). That extension was cancelled by her subsequent order of 9 September 2013, but by that time service had been effected on 29 August 2013. MBGB accept that the response pack was incomplete, but that did not mean that the claim form and particulars of claim had not been served. Mr Hall, who appeared for MBGB, drew my attention to Rajval Construction Ltd v Bestville Properties Ltd [2010] EWCA Civ 1621; [2011] C.I.L.L. 2994, in particular paragraph 4. In that paragraph Longmore LJ said that the requirement to serve a response pack with a claim form pursuant to CPR 7.8 should not be read into CPR 12.3(1) as an additional condition to be satisfied before a claimant may apply for judgment in default. In other words the failure by a claimant to serve a response pack does not absolve a defendant from filing an acknowledgment of service.

I agree that it is implicit in the observation of Longmore LJ just referred to that service of a claim form and particulars of claim is not rendered bad by a failure to serve all or part of the response pack. Not complying with CPR 7.8 may weigh in the balance when it comes to setting aside a judgment in default, but it goes no further.

However I do not accept that the order of 23 August 2013 is to be construed as retrospectively extending MBGB’s time for service of the claim form pursuant to CPR 7.6(3). Such extension of time is not a trivial matter and must be supported by evidence. I have no doubt that if District Judge Lambert had intended to extend time under CPR 7.6(3) she would have clearly so stated. No evidence had been submitted to her in support of an application to extend time for service of the claim form. In fact the order of 23 August 2013 was made without any input from either party.

It follows that the attempted service of the claim form on 29 August 2013 was out of time.

MBGB’s next argument is that there was good service on 14 November 2012 at Irvine Place, two days after the documents were posted to that address. MBGB say that this was Mr Burton’s ‘last known residence’ within the meaning of CPR 6.9(2). It was common ground that Mr Burton lived there from May 2012 at least up until 10 November 2012 and indeed returned on 2 March 2013. He denied receiving the claim form or particulars of claim, although it seems that his wife saw them.

Mr Hall stressed that good service does not necessarily require actual receipt of a claim form or particulars of claim by a defendant, which I accept. He referred to Collier v Williams [2006] 1 WLR 1945 (CA). At [71] Dyson LJ, who gave the judgment of the Court, considered the meaning of ‘last known residence’ where the individual concerned had resided there at one time but had moved on by the time of attempted service.

“What state of mind in the server is connoted by the words “last known"? … As we have said, there is an important distinction between belief and knowledge. It is a distinction particularly well understood in the criminal law, but elsewhere too. The draftsman of the rules deliberately chose the word “known”. In our view, knowledge in this context refers to the serving party's actual knowledge or what might be called his constructive knowledge, i.e. knowledge which he could have acquired exercising reasonable diligence. We arrive at this conclusion on the basis of what we understand the words to mean. We do not believe that there are any policy reasons which require us to give the words a strained or unusual meaning. The risk of satellite litigation is inherent in whatever interpretation is adopted. It is true that a defendant who has not in fact received the claim form should have no difficulty in setting aside a default judgment. But it is not desirable that defendants should be put to the trouble and expense of making applications to set aside default judgments.”

Mr Burton does not dispute that MBGB instructed a private investigator, Mr Manning, to discover Mr Burton’s whereabouts after the documents served at Mayfield Road had been returned. Mr Manning’s evidence was that he was instructed on 8 November 2012 and by speaking to the neighbours at Mayfield Road he discovered that Mr Burton was living at Irvine Place and informed MBGB of this on 8 November 2012.

Before me Mr Hall began to develop an argument which I believe I can summarise as follows: the accurate information from Mr Manning as of 8 November 2012 was sufficient to give MBGB constructive knowledge of Mr Burton’s address and this remained the case at least until 12 November 2012, the date the claim form and particulars of claim were posted to Irvine Place. Thus there was good service.

I put it that way because I interrupted Mr Hall, who was apparently going to take me to several documents and authorities, to ask whether this point was in dispute or whether, as I had understood it, Mr Burton’s objection to good service on 14 November 2012 was limited to a point on the construction of an order made by Birss J. Ms Michaels, who appeared for Mr Burton, very helpfully said that Mr Burton’s objection was indeed based solely on the subsequent order of Birss J. Ms Michaels accepted that as of 12 November 2012 Irvine Place was to be treated as his last known residence.

However after the hearing I received a letter dated 19 February 2014 from Ms Michaels withdrawing that concession. She now argues that had reasonable inquiries been made on 12 November 2012 MBGB would have discovered that he no longer lived at Irvine Place. I take this to be a submission that in law the knowledge which a claimant could have acquired about the defendant’s whereabouts, exercising reasonable diligence, is to be assessed on the assumption that such reasonable diligence was exercised on the day the relevant documents were posted or delivered, as the case may be. Ms Michaels did not draw my attention to any authority for this proposition.

Ms Michaels’ belated withdrawal of the concession is a little unfortunate because Mr Hall has not had the opportunity fully to deal with her argument on the law. Indeed I cut him off as he was getting into his stride on this topic.

However I am in any event not persuaded by Ms Michaels on this point. The logic of her submission is that a claimant must conduct his inquiries into a defendant’s whereabouts on the very date on which the step required for service within the meaning of CPR 7.5(1) is carried out, e.g. posting the documents. That seems to me to be an unnecessary burden and I doubt that it is what the Court of Appeal had in mind in Collier v Williams. I take the view that if a claimant has carried out inquiries with reasonable diligence as to the defendant’s last known residence before that date and on that date it was objectively reasonable for the claimant to believe that the defendant’s residence remained unchanged, then on that date it is still the defendant’s last known residence for the purposes of service by that claimant. Of course the longer the delay between the inquiries and the date of the step required for service the harder it will be for a claimant to establish that there was good service.

In the present case MBGB’s inquiries were sufficient to give it actual knowledge on 8 November 2012 that Mr Burton lived at 23 Irvine Place (which he did). No reason has been advanced as to why MBGB should not reasonably have believed on 12 November 2012 that he still lived there. In my view his last known residence on that date was still 23 Irvine Place so far as MBGB were concerned.

This takes me to the point that was fully argued at the hearing regarding alleged service on 14 November 2012. The recitals in Birss J’s order of 28 May 2013 setting aside his earlier order of 21 February 2013 giving judgment against Mr Burton, include this:

“AND the court finding that the second defendant was not served with the Particulars of Claim”

Two witness statements were filed on behalf of Mr Burton in support of the application to set aside. One was from Mr Burton himself in which he stated at paragraph 7:

“I did not receive a copy of the Claim filed by the Claimant”

He was undoubtedly referring to the documents posted to him on behalf of MBGB on 12 November 2013. The other witness statement is from Paul Kelly, a trade mark attorney advocate litigator acting for Mr Burton. His statement is more in the form of written argument. The first of three arguments advanced by Mr Kelly is that time for acknowledgment of service could not have expired because no “Claim” was ever served on Mr Burton since he was not living at Irvine Place after 10 November 2012.

Ms Michaels submitted that the recital to the order of 28 May 2013 was a finding by Birss J that the particulars of claim had not been served. The order has not been appealed, so the finding may not now be challenged. The claim form and particulars of claim were posted together, so either both were served or neither was. The recital relied on was in effect a finding that neither claim form nor particulars of claim were served on Mr Burton on 14 November 2012.

Mr Hall accepted that the recital was a finding which his client had not appealed and so could not now be challenged. He submitted however that the words were clear: it was only a finding that the particulars of claim had not been served. It remained open to MBGB to argue that on the facts the claim form had been served. It was posted to Mr Burton’s last known residence, so there was good service.

I agree with Ms Michaels that it is unrealistic to interpret Birss J’s finding as distinguishing service of the claim form and service of the particulars of claim. In reality either both were properly served or neither was. Moreover, both witness statements which Birss J will have read in support of the application just refer to service of “the Claim”. If anything, Birss J’s attention was being directed to whether Mr Burton had ever received the claim form.

Nonetheless I am not certain that Birss J addressed his mind to whether there had been good service within the meaning of CPR 6.9. He had no need to do so. What he had to decide was whether his earlier order giving judgment should be set aside. Mr Burton’s application notice relied on both CPR 13.2(a) and 13.3(1)(b). Birss J might have been applying CPR 13.2(a) which would suggest that he accepted that the conditions of CPR 12.3(1) had not been satisfied and that he found in particular that the time for acknowledging service had not expired because there had been no service of the claim form. It is possible. Alternatively he might have been applying CPR 13.3(1)(b) in which case all his recital was intended to mean was that Mr Burton had not received the claim form and particulars of claim. As Dyson LJ observed (see above) that would provide a good reason to set aside the earlier judgment despite there having been good service.

It is not at all uncommon even for those familiar with procedural law to refer to ‘service’ of documents fairly loosely. For instance in the present case, where the distinction is at the centre of the dispute, the helpful chronology jointly prepared by counsel refers more than once to the claim form and particulars of claim as having been ‘served’ although clearly what is really meant, at least on Mr Burton’s behalf as was later submitted by Ms Michaels, is that there was delivery of documents in attempted service.

In the end, however, I take Birss J’s recital to mean literally what it says in relation to his finding that Mr Burton was not served. But I do not read it entirely strictly, in the sense that I take it to mean that MBGB failed to serve both the particulars of claim and the claim form on 14 November 2012. That is a finding from which MBGB cannot now depart.

Mr Hall’s next argument went forward from the proposition that while Birss J made a finding that the particulars of claim were not served, he did not find that there was a failure to serve the claim form. If I am wrong, in that this is the correct way to interpret Birss J’s order, this next argument has to be addressed. As I have indicated, I take the view that on 12 November 2012 delivery of the claim form to 23 Irvine Place would, but for the finding of Birss J, have been good service of the claim form. On the assumption that it was good service, MBGB now applies for an order extending the time for service of the particulars of claim.

The criteria governing an extension of time for service of particulars of claim are significantly less stringent than those relating to extending time for service of the claim form. The general discretionary power must be exercised in accordance with CPR 3.9 including the nine circumstances listed in rule 3.9(1). Of these I think the most relevant to the present case is (b): whether MBGB has made its application to extend the time for service of the particulars of claim promptly. It colours other considerations in the list which would otherwise be neutral.

Mr Hall argued that the earliest date on which MBGB could have applied to extend time was 25 June 2013. Up to Birss J’s order of 28 May 2013 MBGB was entitled to believe that it had properly served Mr Burton with the particulars of claim. It applied to set aside that order and so could not reasonably be expected to apply for an extension of time until its application was dismissed by District Judge Lambert on 25 June 2013. MBGB knew that an extension of time was required at that point.

Mr Hall submitted that when District Judge Lambert made the order of 23 August 2013 of her own initiative, requiring service of the Particulars of Claim by 30 August 2013, the need for an extension of time evaporated. The District Judge had granted an extension, as she was entitled to do in her discretion.

So there were two months to explain away. Mr Hall submitted that one year after the claim form had been issued there could be no urgency and therefore two months was not long in the scheme of things. Also, it covered July and most of August when people were on holiday.

Ms Michaels submitted that (on the assumption the claim form was served on 14 November 2012) MBGB knew that an extension of time was needed from the date of Birss J’s order of 28 May 2013. While it was open to MBGB to apply to set aside that order, it should at the same time have applied for an extension of time to serve the particulars of claim. The relevant delay was therefore three months.

I was referred to Carnegie v Drury [2007] EWCA Civ 497; [2007] EMLR 24 as an example in which the Court of Appeal found that a delay of 3 months was too long to allow a retrospective extension of time. However this case concerned an application to extend time for service of the claim form.

I agree that once MBGB had sight of Birss J’s order of 28 May 2013 then assuming the claim form had been served MBGB was on notice that the particulars of claim had not. The application to set aside Birss J’s order should have been accompanied with an application for an extension of time. So the delay was around 3 months. MBGB’s real difficulty is that no evidence has been filed explaining this delay. I do not accept Mr Hall’s submission that delays become less culpable the longer it is since the claim form was issued. Summer holidays taken by one or more individuals may have had something to do with it but there has been no evidence in support of that rather general alternative submission.

Therefore on the assumption that the claim form was served on 14 November 2012 I do not now grant a retrospective extension of time to serve the particulars of claim.

Mr Hall’s next argument assumed that the claim form has never been served. He submitted that I should now retrospectively grant an extension of time to serve the claim form pursuant to CPR 7.6(3).

Pursuant to CPR 7.6(4)(a) an application for such an extension must be supported by evidence. Pursuant to CPR 7.6(3)(b) and (c) that evidence must show, respectively, that MBGB took all reasonable steps to comply with rule 7.5 (i.e. to serve within the 4 months) but has been unable to do so and that MBGB has acted promptly in making the application for the extension of time.

Ms Michaels submitted that there was no evidence in support.

There is a little evidence in support. A witness statement of Owen Ross dated 12 September 2013 exhibits MBGB’s application notice of 14 January 2013 among other things. Mr Hall relied mainly on box 10 of that application notice. This gives a condensed account of the sequence of events between issue of the claim form on 10 August 2012 and Mrs Burton calling MBGB’s solicitors on 16 November 2012. On that explanation of events MBGB knew on 19 September 2012 that Mr Burton did not appear to live at Mayfield Road where the claim form had been served, but did nothing to find him until 8 November 2012. No explanation has been given for the delay of over 7 weeks. After postal of the claim form to Irvine Place on 12 November 2012, on 16 November 2012 at the latest MBGB knew that Mr Burton was not living there and that time for service of the claim form was running out. There is no evidence as to what steps, if any, MBGB took to find him between that date and the expiry of the claim form on 13 December 2012.

No evidence at all was served to show that MBGB has acted promptly in making the application now for an extension of time. My knowledge of the sequence of events from evidence served other than in support of this application suggests that MBGB has not acted sufficiently promptly.

Because of the combined lack of evidence on those two matters I dismiss the application under CPR 7.6(3).

MBGB has one final fallback position. Even if neither the claim form nor the particulars of claim has been served within the rules, Mr Hall submitted that it is open to the court to rule that the steps that were taken by MBGB to bring the claim form and particulars of claim to the attention of Mr Burton were sufficient to qualify as good service, pursuant to CPR 6.15(2) and 6.27.

Those rules require that MBGB shows good reason for permitting service by alternative means and the application must be supported by evidence.

Specifically, it is submitted first that I should rule that service at Mayfield Road on 23 August 2012 was good service. However there is no evidence that as of that date it was even reasonable for MBGB to serve at that address. I reject this submission.

Secondly it is submitted that I should rule that there is enough evidence for me to order that service at Irvine Place on 14 November 2012 was good service. This starts with the significant advantage that in my view this was Mr Burton’s last known residence when the documents were posted on 12 November 2012.

The first difficulty however is that MBGB invites me to make an order which, in effect, is not consistent with a finding by Judge Birss that there was not good service on that date. I accept that the whole point of CPR 6.15 and 6.27 is to allow for the possibility of good service in the absence of the conditions for service under the usual rules. But that is not the same as making an order which has the practical effect of neutralising an earlier finding of the court which has not been appealed.

CPR 6.15 raises two issues: (a) whether good reason has been shown sufficient to engage the rule and if so (b) whether the judicial discretion which then arises should be exercised in favour of making the order. They are cumulative conditions. ‘Good reason’ is something less than the exceptional circumstances required by CPR 6.16. See Bethell Construction Limited v Deloitte and Touche [2011] EWCA Civ 1321, at [24]-[25] and Abela v Baadarani [2013] UKSC 44, at [33]. On the other hand the court should adopt a rigorous approach to what is an application by a claimant for an indulgence (per Andrew Smith J in Brown v Innovatorone plc [2009] EWHC 1376 (Comm); [2010] 2 All ER (Comm) 80, at [40]).

There has been no service of the claim form and the particulars of claim in these proceedings largely because of what appear to me to be a series of faulty steps on MBGB’s part. I do not think that CPR 6.15 and in particular the retrospective power given to the court under CPR 6.15(3) was designed for the purpose of curing that sort of failure to comply adequately with the civil procedure rules. By extension the same applies in relation to CPR 6.27. MBGB’s overall contention may be that the difficulties in service have been caused by the evasive behaviour of Mr Burton, but there is no real evidence to show that he was evasive, as opposed to being obliged to move home solely for domestic reasons.

I do not think that MBGB has shown sufficient good reason to engage CPR 6.15 or 6.27. If it had, depending on what the reason was this might have influenced the exercise of the discretion. While the two are distinct they may in some circumstances be linked. As it is, in my view the court’s discretion would not be exercised to make a retrospective order under those rules.

I asked Mr Hall during the hearing why his clients had not simply issued a new claim form. At any time from the order of Birss J on 28 May 2013 right up to making the present application, service of fresh proceedings on Mr Burton at 23 Irvine Place would have achieved at much less cost to all concerned what MBGB wants, namely that the litigation finally moves forward. Mr Hall freely confessed he had no answer. Such an approach to litigation does not serve as an encouragement to resolve a litigant’s difficulties by orders of the type sought in the present application.

I dismiss the application under CPR 6.15 and 6.27.

I do not accept any of the routes advanced by MBGB by which the court should order that there has been service of either the claim form or the particulars of claim. MBGB’s application as a whole is dismissed.